Student loan forgiveness program introduced by President Obama

Student loan forgiveness program affects federal student loans

The president announced a student loan forgiveness program on Wednesday and it is being met with mixed reactions.

Bakersfield Now reports that the federal student loan forgiveness program would affect a measure that has already been passed by Congress. The current measure caps student loan payments at 15 percent of discretionary income and any remaining debt after 25 years is forgiven. The revised student loan forgiveness program, however, would cap payments at 10 percent of discretionary income and any remaining debt after 20 years would be forgiven.

“Our economy needs it right now,” Obama said when introducing the proposal. “And your future could use a boost right now.”

The plan would also allow borrowers with loans from the Federal Family Education Loan Program and a direct loan from the government to consolidate them. This proposed program would go into effect in 2012, two years sooner than the original plan.

While many students are excited about the proposal, some believe that others would abuse the program, refusing to pay off loans simply because they will, at some point, be forgiven.